NEW DELHI: Finance Minister Nirmala Sitharaman asked the Reserve bank of India (RBI) to prepare a 'Whitelist' of legal loan apps.

The Reserve Bank of India (RBI) has been asked to create a "Whitelist" of legitimate lending apps to combat the threat of illicit loan apps, and the Ministry of Electronics and Information Technology (MEITY) has been entrusted with ensuring that only these apps are accessible on app stores.

Following a meeting on Thursday with senior representatives from the RBI, MEITY, the ministries of Finance and Corporate Affairs, under the direction of Finance Minister Nirmala Sitharaman, all ministries and agencies have been urged to "take all possible actions to prevent operations of such Illegal Loan Apps."

The minister expressed concerns during the discussion about apps that offer loans or microcredits, particularly to vulnerable and low-income groups of people, at astronomically high-interest rates and that use extortion and criminal intimidation to recover such loans.

the Finance Minister also warned against the "possibility of money laundering, tax evasion, invasion of privacy and data, and exploitation of unregulated payment aggregators, shell firms, and closed NBFCs for carrying out such operations."

The central bank has also been tasked with reviewing and closing dormant non-banking financing firms (NBFCs) to prevent their abuse by such app operators, as well as monitoring "mule or rented" accounts that may be used for money laundering.

According to a statement from the Finance Ministry, "The RBI will ensure that registration of payment aggregators is completed within a timeframe and no unregistered payment aggregator be allowed to function after that." The Ministry of Corporate Affairs will also identify shell companies and de-register them to prevent their misuse, the statement continued.

The Minister instructed following "extensive discussions on the legal, technological and procedural issues of such apps" that "steps should be taken to improve cyber awareness for clients, bank staff, law enforcement agencies and other stakeholders." The actionable items will be regularly checked for compliance, according to the Ministry of Finance.

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